Termination under Limited Labour Contract (the rules)

Limited labour Contract Termination – What does the Law say?

You would already know that there can be 2 types of Contracts under Ministry of Labour: Limited Contract and Unlimited Contract.

You may have already read about Limited Contract. It’s a type of contract that is made for a ‘limited’ time, which is usually 2 years. UAE Labour Law covers the termination part of the UAE Labour Law, under 2 different Articles under the Labour Law. Here I will try and explain the same.

limited contract termination

ARTICLE (115): Employer Terminates the Limited Contract

If the employer has terminated an employment contract with a limited period, for reasons other than those provided for under Article (120) hereof, he becomes liable for payment of compensation to the employee against damages sustained by him, provided that the sum of compensation in all events, may not exceed the total pay due to him for a period of three months or for the remaining period of contract whichever is shorter, unless the terms of the contract provide otherwise.

Note: This Article clearly states your rights in case you are terminated under Limited Labour Contract. If you are terminated under Limited Labour Contract, you are eligible for the compensation for the rest of the contract period or compensation for 3 months whichever is shorter. However, if you are terminated for any reason as below, you will not be eligible for the compensation.

Reasons for termination:

  • If the employee adopts a false identity or nationality or if he submits forged documents or certificates.
  • If the employee is appointed under a probationary period and dismissal occurred during or at the end of said period.
  • If he commits an error causing substantial material loss to the employer provided that the latter advises the labour department of the incident within 48 hours from having knowledge of the same.
  • If the employee violates instructions concerning safety of the place of business provided that such instructions are displayed in writing at conspicuous places and in case of an illiterate employee the latter be informed verbally of the same.
  • If he fails to perform his basic duties under the contract of employment and persists in violating them despite formal investigation with him in this respect and warning him of dismissal if the same is repeated.
  • If he divulges any secrets of the establishment where he is employed.
  • If he is awarded final judgement by the competent court in respect of an offence prejudicing honour, honesty or public morals.
  • If during working hours he is found drunk or under the influence of drug. If in the course of his work he commits an assault on the employer, the manager or any of his colleagues.
  • If he absents himself without lawful excuse for more that twenty intermittent days or for more than seven successive day during one year.

ARTICLE (116): Employee Terminates the Limited Contract 

If the contract has been terminated on part of the employee, for reasons other than those provided for under Article (121) hereof, the employee becomes liable for compensating the employer against losses incurred by him in consequence of contract termination, provided that the amount of compensation, may not exceed half a month’s pay for a period of three months or for the remaining period of contract whichever is shorter, unless the terms of the contract provide otherwise.

Note: Article 116 mentions your rights as an employer. If your employee has terminated the Limited Labour Contract, your employee should compensate you 45 day salary or for the remaining contract period, whichever is shorter.

Companies are not eligible for compensation, if your employee terminates contract for below reasons:

  • If the employer does not fulfil his obligations towards the employee as provided for in the contract or in this Law.
  • If the employer of his legal regal representative has committed an act of assault against the employee.

So you can see here that the Labour Law of UAE makes fair effort to protect the rights of both the employer and the employee. Familiarise with UAE Labour Law by reading it. You must also appreciate that UAE Labour Law protects the rights of both the employee and the employer.

About Deepak 505 Articles
Deepak is a passionate blogger with interests in bitcoin, online marketing, and writing.

11 Comments

  1. Hi My brother in law has a limited contract and was terminated due to submission of cert of comp with a company stamp which he was requested from his co-workers so he can file for a loan from a lending company. He was not aware that it’s not allowed in the company nor was told by his co-worker. He was immediately terminated and to was told legal action will be done. He was scared of the thought being put in jail so he decided to go back here in the Philippines because he was told he was already terminated but not in writing. He then received an sms that a complaint was filed to him by his employer was told to report but he is already here in the Philippines. Will he gets a ban or will he be put on jail? Pls advice.

  2. hi,
    am working under the limited contract and am on my four month plus with my company. l have already submitted my resignation letter this is due to my health conditions. my question now is will my employer give me grace of one month to search for another job after my cancellation.

  3. I am working on limited contract which is for 2 years my labor contract will finish on 26th Nov 16. Due to emergency situation as my mom is not well i will have to go back to India as will not be able to continue the contract. I have already informed about the situation in office and said i am ready to serve notice period but my MD wants me to pay my visa fees trying to block me. In this situation if go to India without informing and serving notice period and then i send resignation from India with medical documents attached will that be excepted. If i follow this process will i get life time ban for UAE for employment. I will send my passport from there for cancellation. Please guide me as i am in urgency for going home.

  4. dear, sir how i can remove my emplyoment visa ban. i was will come dubai befor 6 years befor
    my company not give me efective salary after i will come back my home after 2 momth and not visa stamp ? my company owner stamp life ban ? please sir help me remove my ban ?

  5. hi sir
    i started to work in a company from the date of e-visa 12-10-2015 issued date.now i got a termination letter to all staffs because of loss in business/company closing them self.so me one person not complete my probation period then i find a job also but if company cancels my visa i will get 1 year ban so this ban can be remove if can how and what are the conditions.if company cancels my visa i will get benifits if not provide i can file a case because that was not my problem closing company.please let me get information.

  6. My friend joined a company as office manager in dec 15 with 4.5k salary and basic 4k but now he got an new offer with total 8 k as salary and position as manager and his current employer is ready to give noc also.

    In this case any ban will be imposed to my friend.

  7. I have join company in Abu Dhabi under limited contract from 13/04/15 to 12/04/17, I have doubt to continue in the organization that I’m working for as Sales Representative due to the Managing Director is abusing his power over his employees specially to my colleagues.

    I’m looking and thinking how to get out from current company which I’m in to. I’m have Bachelor Degree and salary is AED 5,000.00 with allowance and basic is AED 2,000.00.

    If I resign or terminate my contract:
    Do I need to pay anything to my employer?
    Will I get ban?
    If I want to go my home country who will shoulder my 1 way ticket?
    Will I receive gratuity?

  8. i joined the new company.However my entry permit has been done, my medical is not yet on process and emirates ID. Visa cannot be stamped. I ask my company regarding my visa stamping. Its going to end very soon.Then they just replied me that I can start to find new job since I was not capable according to them.I was shocked coz i worked for 1 and half months only .I told them if they will cancel probably i will have a ban.They said they will give me a NOC or they will transfer my visa whenever i found new one. Sir, I just wanted to know, is the ban will be lifted if my company will give me this supporting documents?So far I have only a secondary certificate.

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